Ireland needs new bailout: minister

DUBLIN: Ireland may need an extension of its existing EU, IMF bailout or a second rescue programme as it will be able to return to the debt markets next year, a government minister was reported as saying on Sunday.

Transport Minister Leo Varadkar is the first cabinet member to cast doubt in public about the government's aim of returning to bond markets next year.

"I think it's very unlikely we'll be able to go back next year. I think it might take a bit longer 2013 might be possible but who knows?" Varadkar was quoted in The Sunday Times newspaper as saying."It would mean a second programme," he said.

"Either an extension of the existing programme or a second programme I think that would generally be most people's view."

The Irish government wants to tap investors for funding in 2012 before its 85 billion euros EU-IMF bailout runs out the following year.

But investors believe Ireland will be unable to return to the market and instead will have to tap the European Union's permanent rescue fund in 2013, which might require some restructuring of privately held sovereign debt.

Reflecting this medium-term risk, Ireland's two-year and five-year paper are yielding close to 12 percent, more than its 10-year bonds on the secondary market.

Some 50 billion euros of the existing EU-IMF bailout has been earmarked for sovereign funding requirements with the remainder set aside to prop up the country's ailing banks.

Earlier this month, the IMF said whatever was leftover after recapitalising the banks could be channelled to the sovereign if there was a delay in returning to markets.

At the end of March, the Irish government said the banks needed 24 billion euros to bulletproof their balance sheets but Dublin hopes some 5 billion can be raised from imposing losses on junior bondholders and asset sales, meaning that 19 billion euros of the 35 billion would be tapped.

Copyright Reuters, 2011